Ubisoft’s Microtransaction Revenue Just Beat Digital Sales for the First Time

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Microtransactions have been hotly debated since they began debuting in mobile games almost ten years ago. While they’d been used sporadically in various games for years, the rise of mobile games and their extremely low-to-free pricing made them a functional necessity for developers working in Android or iOS. The AAA PC gaming industry quickly took notice of this, and began offering games with microtransaction options. There’s been a great deal of pushback from the community at various points (Dead Space 3 got hosed for it, as did Bethesda and its horse armor), but microtransactions are clearly here to say. Ubisoft just reported that it took in more money in microtransaction sales than it did in game sales for the first time ever.

Over the past few years, Ubisoft has seen a notable shift in its earnings for various titles, SeekingAlpha reports. Game sales were buoyed this year by South Park: The Fractured But Whole and Assassin’s Creed: Origins, but microtransactions shot up even further, growing 1.83x in 12 months compared to 1.57x for game sales. Ubisoft also got a boost from the Switch, but even with Nintendo’s new platform, microtransactions brought home the bacon.

There are some important caveats to acknowledge. First, recurring player investment is a broad term, encompassing not just microtransactions, but also DLC and other content packs. These items are often more expensive than the old mobile world design of dropping $ 1.99 for a pack of bombs that let you bypass a level, but they also tend to deliver more content.

There’s no intrinsic problem with microtransactions, but it’s a difficult balance to strike. Players generally don’t care about cosmetic filters that don’t affect gameplay, but selling access to things that do affect gameplay matters. There’s also the question of whether the developer communicates how small a chance players have of actually winning the skins or items in question. To be fair, Ubisoft seems to be dealing with this situation fairly well; players were initially afraid that Assassin’s Creed: Origins would be stuffed full of loot crates and a pay-to-win system, but that hasn’t been the case thus far. Still, gamers care about these kinds of systems and how publishers handle “recurring player investments” is critical to their long-term success.

There’s still reason to be concerned about this kind of payment system. The problem with creating a “recurring player investment” category in which only some players are continually investing is that it’s easy to fall into a mindset where minor cosmetic updates or skins are a larger focus than core gameplay. The pressure to create a play-to-win system is high, especially if a game’s revenue starts to drop off. And the more people invest in a game, the more likely they are to want preferred treatment in response to that investment.

The more games move to this kind of model, the more game funding will be limited to a small group of people willing to invest large amounts of money on loot crates, boosts, or gear. In the long run, it could even make it harder for new games to attract players. One reason MMOs tend to be sticky over longer periods of time is because people recognize they have both a cash investment (monthly subscriptions) and a great deal of time spent in-game. One reason why so many MMOs failed to capture market share after World of Warcraft debuted, I’d argue, is that WoW was sucking all the air out of the room. While I realize this is far from a universal opinion, I’d rather see the price of games go up than watch games depend on more and more revenue from a small group of players.